No matter what I do I cannot get the aspect ratio right. When I click "Import" and it starts importing the footage, it is vertically squished, and everything looks short and stubby.
Assuming iMovie '08 is working normally, it sounds as if you have 4:3 aspect video content which is, for some reason, being flagged as 16:9 content. Basically, your project/preview display is keyed to the widescreen "flag" embedded in the movie file. Except for the thumbnail icons, the actual "current size" of your files is ignored by iMovie '08. All DV content, whether 4:3 or widescreen aspect ratio, is encoded in a 720x480 (NTSC) or 720x576 (PAL) matrix. It is this flag which tells an application like iMovie '08 whether to display the content as either a 4:3 (640x480 or 768x576) or 16:9 (853.33x480 or 1024x576) scaled preview display on your monitor. So if you are getting "squished ... short and stubby" previews, it sounds as if your content was recorded in 4:3 aspect mode on your camcorder but flagged as anamorphic 16:9 content. To confirm this open the file in the QT Player and check the "Inspector" window. The "Format:" line should indicate the DV encoded dimensions followed by the "square pixel" dimensions for the encoded DV in parentheses. These dimensions in parentheses represent the "flagged" aspect ratio of your content. Now check the "Normal" and "Current" size dimensions. These normally should match the dimensions above in parentheses with the "Current Size" entry controlling the aspect as displayed in the QT Player and most other QT applications that ignore the anamorphic flag.
Not an expert here, but I suppose that some older camcorder models may have used this flag improperly or erroneously or even mistakenly for some reason. I would suggest you download the older iMovie HD (free 6.0.4 version) and see if it has the same problem. If it does and you have QT Pro, you can try resetting the "Current Size" to the correct aspect ratio dimensions, save it using the "Save As..." option, and drop-import the new file back into iMovie HD. (This process does not re-compress the content.) Another solution would be to use an application like MPEG Streamclip to "re-set" the flag properly for use with iMovie '08. Unfortunately, this requires you to re-compress the content which is not something you really want to do if it can be avoided.
Also be aware that if you use properly flagged 16:9 content and physically segment clips from within iMovie '08, this can cause the anamorphic flag to be lost when the files are physically re-written -- which is an opposite problem to the one you now appear to be having.
